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Banks will not accept altered or previously deposited cheques from August 1 this year.
On average, a cheque is handled by about 20 people from the time you make it out to the time it is presented to your bank for payment. This provides ample opportunity for it to be intercepted by unscrupulous individuals.
The Banking Council an-nounced this week that the decision to reject altered and redeposited cheques was necessary to protect both banks and their clients from fraud.
It has been estimated that more than 60 percent of losses from cheque fraud - which stood at R162 million last year - were a result of criminals changing cheques after they had been issued.
Altered cheques
Criminals can fraudulently withdraw money from your account by changing a cheque and then copying your signature on the cheque to "countersign" the changes.
For instance, the criminal can change the name of the payee (the person who must receive payment) to his or her name as well as the amount to be paid out.
Up to now, any changes needed to be signed by the issuer of the cheque. To get around this, criminals copy your signature, which appears at the bottom of your cheques, in order to "countersign" the changes they make.
From August 1, the banks will will return altered cheques to depositors, marked "unable to collect funds - alteration".
It is important that you do not accept cheques that have been altered in any way because, from August 1, you will not be able to collect money from a bank by presenting an altered cheque.
Similarly, when making out a cheque, do not alter anything after having written it out. If you make a mistake, you must write out a new cheque.
Previously deposited cheques
A previously deposited cheque is one which has been deposited and stamped by a bank, but which has subsequently been referred back to the depositor without the bank paying out the money.
There are various reasons why a bank will not pay out the value of the cheque. These include:
- The cheque may be post dated and paid in before the date that appears on the cheque; and
- There may be insufficient funds in the issuer's account to cover the value of the cheque. These cheques are sometimes referred to as having "bounced".
Criminals have caught onto the fact that they can sometimes get away with fraud by redepositing previously deposited cheques.
From August 1, your bank will return any cheques to you that have been previously deposited, marked "unable to collect funds - already negotiated".
An unpaid cheque is generally returned to the person who deposited it. If, from August 1, you are given such a cheque as payment, you will have to:
- Ask the person who gave you the cheque to issue you with a new cheque; or
- Ask the person to pay you by depositing the money electronically directly into your account.
Similarly, if you have issued a cheque which the bank returns unpaid, you will have to pay the person to whom you owe the money by issuing a new cheque or making an electronic payment.
Not transferable cheques
Following a change in the law, the banks have laid down new conditions to which you must adhere if you want to enjoy the protection offered by writing "not transferable" on a cheque.
From July 1 this year, banks will not accept liability for "not transferable" cheques which are made out incorrectly.
If, for example,you make out your cheque to, J Jones and mark the cheque "not transferable", your instruction is that only J Jones may be paid.
You must ensure that you write in bold letters either "not transferable" or "non transferable" across the face of the cheque (preferably using a red inked rubber stamp). Only then will you have a claim against a bank that negligently pays your cheque to the wrong person.
You should know the following when making out a cheque as "not transferable":
- You must write out in full - and correctly spell - the name of the person or organisation you want to pay;
- The person or organisation you are paying must have a bank account - a "not transferable" cheque can only be paid into a bank account; and
- Once you have written "not transferable" on a cheque, you may not cancel these words.
How to pay electronically
Making payments electronically is far cheaper than paying by cheque.
You can make direct electronic payments at an ATM, by telephone or over the internet. The fees vary between banks and also between the different cheque account packages. At Absa, for example, making payment of R250 by cheque (if you have the basic cheque account package) will cost you R5.31 whereas if you transferred the R250 into somebody's bank account at an ABSA ATM it would cost you only R2.20. Making a payment over the internet or over the telephone would cost only R2.
To make an electronic payment you need the bank account details of the person you plan to pay, including the account number, the branch code and the name of the account holder.
To pay over the phone or at the ATM you must give this information to your bank which will set up the person's details as an account to pay. If you are using the internet you can set up the account yourself.
After that, it's a matter of phoning your bank, using the internet or an ATM to pay the money, either once off or on a regular basis.